Intrade isn’t being tagged for its “betting” activities, they got them for selling unregulated derivatives. Why don’t you go ask the housing market how well unregulated derivatives worked out for them.

Please differentiate between betting and investments* without reference to social norms. It seems to me as though betting is legal on a subject-variant basis. With perhaps the exclusion of assassination markets, this seems like petty moralizing to me.

Betfair is a sophisticated prediction market, with a huge client base and an exemplary record of forecasting accuracy, notably in respect of U.S. election races. Yet Betfair has achieved this status without ever taking bets from the U.S.

Just to clarify my earlier comment, I was in no way criticizing Intrade’s policy of taking bets from the US. I was simply making the point that Intrade’s forecasting accuracy may not suffer from the recent announcement.

There aren’t easy ways around the online poker ban for professional player. That with the addition of Hugh barrier to entry for American casual players does effectively end online poker for American customers. VPNs are scanned for by the sites so that’s not an option. What is your “simple” solution? Comment reeks of someone who doesn’t actually play but assumes.

Total waste of money and resources as usual. There is nothing threatening about this market other than it’s ability to predict things that governments would rather be left in the shadows. The stock market is nothing but high stakes gambling that is cheered on every day. Money has been equated to speech by SCOTUS and now Americans can’t use their “speech” to predict the outcome of events? Hypocrisy much?

Although one can gamble in the stock market (shorting, buying on margin, etc), for most people it’s no more gambling than any other purchase in a market. If I purchase a few chickens, and plan to make a steady income selling eggs and raising more chickens, is that gambling?

When I buy a stock which a) pays dividends, and b) may well increase in value, why that any more gambling than my chicken farm?

From a strict literal standpoint, gambling involves an agreement between two or more parties to exchange money based on future uncertain events.

In a looser sense, shorts are gambling that the stock will fall, and regular buy-and-hold is gambling that it will rise. However, both of these are really pseudobets where one of the “parties” to the bet is an abstract market entity.

The real disagreement is whether the distinction (between actual definite parties and the abstract market “party”) is material. I don’t think that it is; the discrete agency of the opposite party isn’t important if it will act to close the wager regardless. If you do think that the difference is important, separating insurance from gambling is even more challenging.

Also, yes, in an even looser sense, buying egg-laying chickens is gambling; the market “party” to the wager agrees to pay you if the chickens turn out to produce eggs. The physical existence and required forfeiture of the eggs are more substantial differences from a traditional wager, though, at least in my opinion.

I also agree that I don’t think the distinction is material. Isn’t gambling services like Proline technically the same as something like Intrade or the markets, in the sense that you are making the “bet” with a neutral and/or abstract third party?

If buying egg-laying chickens is gambling, then every economic activity is gambling, because there is always some uncertainty: a fox may raid the henhouse, I may trip on the way to market and break my basket of eggs, etc… But the difference is that, barring unlucky chance, I expect my profit to come from my labor and/or investment. Gambling involves no labor or investment: the value exchanged is determined strictly by chance.

Same applies to the stock market. Sure, if I was a day trader wagering on making the right calls on short-term price variations, I’d be close to pure gambling – or perhaps closer to poker? But when I invest based on dividends & growth prospects, I expect profit to come from the work done by my already-earned dollars, not from chance.

RJ:
It’s my understanding that Intrade actually matches people’s bets in such a way that each share represents a single $10 bet between specific individuals, even if they may not know each other’s names.

James:
Yes, the chickens and eggs have more substantial differences from gambling, as I conceded. Perhaps they have served their full purpose as analogies, as I think they can be distinguished from traditional gambling and market investments in important ways. The comment about every economic activity being gambling under even a slightly relaxed definition certainly rings true to me, though. Some conceptual frameworks apply quite broadly, e.g. games.

“I expect profit to come from the work done by my already-earned dollars” confuses me. The company does not in fact get the dollars, and they certainly do no labor. Your returns are determined by something your money does not actually affect (in any meaningful way). There’s never certainty that a stock will rise, no matter how much you might like it. Hence the outcome depends on future uncertain events.

James, sounds like you’re stuck on this high horse thinking that the stock market is the only game around which is based on skill. New York just ruled that poker is a game of skill… and read this story and try to tell me that the author didn’t use a little hard work and considerable effort making thousands off intrade predictions: http://www.buzzfeed.com/intrader/inside-intrades-political-market

Unregulated directives markets, unregulated banks and unregulated casinos present huge problems for both their customers and society at large. All to often grey market outfits like Intrade or online casinos or poker sites will be making large portions of their revenue from fraud or activities that are legitimately illegal for a reason. They will cry like hell that the man is somehow squashing the little guy that is providing a valuable service, but more often than not when you peel back the curtain what exists is a bona fide criminal enterprise.